“Tax season is crazy,” says Dr. SJ. “I earn from three different hospitals, I recently moved and my kids just started going to school. I’ve tried to hire a CA but they’re too quick to jump on any large corpus and I don’t trust them. Any advice?”

Tax Season: Doctors

I didn’t realize tax season was so taxing because of the varied tax times everyone has for filing. By and large I think most people are done filing taxes whether that’s India or the US and if you’re worried about what you’re paying now it’s too late.

Before I hand out any advice, let me put it out there. I’m no tax maverick. I have zero training and everything I know about filing taxes is from experience. But I’ll tell you what I know and apply to my gig just so your life can be a little easy.

Plan for Next Year

I can’t stress how important it is to plan before you earn. Forget the minutiae, make a general plan before your paycheck comes in at the end of this month. You have a rough idea about how much you will make for a year. So plan ahead, fix the dates on your calendar, dates for review, dates to file taxes, file returns, bill payments and audits. That way you don’t miss any deadlines. Also plan how much you will save for retirement, investments, children’s school and vacations planned. Do it now! Alert your bank if you want automatic deductions or if you have a portfolio. Talk to your bank.

Seek Professional Advice

When it came to hiring a CA I realized just as Dr. S.J did, that they don’t have your best interest at heart. Not all but some. They have financial interests and I’m quite wary of sharing any of these details with anyone. So I sought professional advice and learned what I had to do.

Yes I paid to learn this stuff because I intended to do it myself and do it faster and better. I hate having to depend on a CA to get my own books fixed. Send email after email, set up an appointment, go to them, then wait for them to do the job, if they don’t do it, then remind them. So I made the investment to learn.

For anyone who knows me also knows I’m a dud in maths. I hate mathematics but I can count money. 🙂 Certainly I can count my own and know when I’m giving away too much and having little of it myself. Hahaha. So I spent the time and money to learn the system. It took time. I made mistakes. Like for the first year, I didn’t know that purchasing medical supplies could give me a tax deduction. I didn’t know that health insurance could lessen the tax burden. But by the second year, I was wiser.  If there’s one thing you can do, it must be this. Figure it out yourself. Don’t become entirely dependent on CA, down the line, you will find that they’ve led you on some ride. People tend to do that when it’s someone else’s money.

Keep A Record

I’ve realized its not complicated if you have all your ducks in a row. That is, you track everything in a ledger or a spreadsheet. Keep all your bills of the purchases you made, everything. This will also help you become more fiscally responsible. If you went to a medical conference you can claim it as business education and get a deduction. Similarly for business, if you bought medical software or medical equipment there’s a chance for you to save. So make a ledger or a book that tracks everything that can help you during tax time.

Claim Everything

via GIPHY

If you’re paying dues for the medical union, AMA, AMWA, childcare, or even if you were looking for employment those are all tax deductible in the US and Canada. In India, with the Aadhaar in place the tax net has tightened but tax slabs for doctors and the presumptive tax payment claims to save  doctors money. I don’t know much about it because I don’t presume much about money. I like a fair view of the slab and then pay accordingly. 🙂

Increase Funds to Tax free sources

In the US, this would be IRA or 401K’s. In India this would be PF and National Saving schemes, Life insurance policies etc. These are all investment tools with tax free benefits.  You could also donate more to charities wherever you are. Certain organizations are recognized by the government to allow 100% deductions on charitable donations. I don’t use this because it’s strange that I pay a certain tithe to a charity and benefit financially from it when that’s not the purpose of a tithe. It has to hurt!

One Roof 

I was recommended a one roof policy by my adviser. I see many doctors have separate accounts for each of the hospitals they are associated. I think that’s too messy. Bring everything under one umbrella account. Everything is on spreadsheet now. Or take an Excel course from Wharton to learn how to use spreadsheets. Keep it simple. There’s no benefit to being a Raggedy Ann running from one bank to another or one call center to another to get your financials sorted at the height of tax season.

It’s Just Money

People go absolutely crazy if the government took a hundred bucks extra or if they got five bucks less from their returns. In the grand scheme of checks and balances, you will get your money back some other way, don’t sweat it. It’s just green, pink or blue paper. That’s all. There’s no need sacrificing your health, sleep and energy over it. If you’re going to agonize over every penny then you’re going to hate doing taxes. I’ve given up rounding and checking every number.

I’ve started to look at the greater picture. Without the worry I just do a more or less estimate and work accordingly. If I end up paying extra I don’t lose sleep. It’s just paper.

Hope this helps you Dr. SJ.